Exhibit
10.1


 


FIFTH
AMENDMENT TO REVOLVING LOAN AGREEMENT


 


THIS
FIFTH AMENDMENT TO REVOLVING LOAN AGREEMENT (this “Amendment”) is made and entered into as of November 27,
2015, by and between WSI INDUSTRIES, INC., a Minnesota corporation (the “Borrower”), and BMO HARRIS BANK N.A.,
a national banking association, successor by merger to M&I Marshall & Ilsley Bank (the “Bank”).


 


RECITALS:


 


A.The
Borrower and the Bank are parties to a certain Loan Agreement dated February 1, 2011, as amended by an amendment dated February
1, 2012, an amendment dated January 30, 2013, an amendment dated January 31, 2014 and an amendment dated January 26, 2015 (as
so amended, the “Loan Agreement”). All capitalized terms not otherwise defined herein shall have the meanings
given to them in the Loan Agreement.


 


B.The
Borrower has requested that the Bank amend certain provisions of the Loan Agreement and the Bank has agreed to do so upon the
terms and subject to the conditions set forth in this Amendment.


 


AGREEMENTS:


 


NOW,
THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration,
the nature, receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:


 


Section
1.Delivery of Documents. At or prior to the execution of this Amendment, and as a condition precedent to the effectiveness
of this Amendment, the Borrower shall have satisfied the following conditions and delivered or caused to be delivered to the Bank
the following documents each dated such date and in form and substance satisfactory to the Bank and duly executed by all appropriate
parties:


 


(a)This
Amendment.


 


(b)The
Amended and Restated Revolving Credit Promissory Note.


 


(c)An
Acknowledgment of Guarantors, duly executed by each Guarantor.


 


(d)A
copy of the resolutions of the Board of Directors of the Borrower authorizing the execution, delivery and performance of this
Amendment certified as true and accurate by an officer of the Borrower, along with a certificate of such officer which (i) certifies
that there has been no amendment to either the Articles of Incorporation or the Bylaws of the Borrower since true and accurate
copies of the same were last delivered and certified to the Bank, and that said Articles of Incorporation or the Bylaws remain
in full force and effect as of the date of this Amendment, (ii) identifies each officer of the Borrower authorized to execute
this Amendment and any other instrument or agreement executed by the Borrower in connection with this Amendment, and (iii) sets
forth specimen signatures of each officer of the Borrower referred to above and identifies the office or offices held by such
officer.


 


(e)Such
other documents or instruments as the Bank may reasonably require.


 




    	 



    	 



    

 


Section
2.Amendments to Loan Agreement.


 


(a)Definition
of Maturity Date. The definition of “Maturity Date” in Section 1.01 of the Loan Agreement is amended and
restated in its entirety to read as follows:


 


“Maturity
Date” means February 28, 2017.”


 


(b)New
Defined Terms. The following new defined terms are hereby added to Section 1.01 of the Loan Agreement in the appropriate alphabetical
order:


 


“EBITDA”
means, as of any date, the sum of Borrower’s earnings after taxes, plus interest expense, plus taxes, plus
depreciation, plus amortization, in each case for the applicable period ending on such date and as determined in accordance
with generally accepted accounting principles applied consistently with past practices.


 


“Liquidity”
means the Borrower’s cash balances on deposit in bank accounts plus the Commitment minus the aggregate total
of all outstanding Loans advanced to Borrower.


 


(c)Financial
Statements.Section 5.01 of the Loan Agreement is amended to (i) replace the reference appearing in clause (a) thereof
to “Sections 5.09 through 5.13 hereof” with references to “Section 5.08 through 5.11 hereof” and (ii)
replace the reference appearing in clause (b) thereof to “Sections 5.08 through 5.12 hereof” with references to “Section
5.08 through 5.11 hereof”.


 


(d)Minimum
Liquidity.Section 5.08 of the Loan Agreement is amended and restated in its entirety to read as follows:


 


Section
5.08Minimum Liquidity. So long as the Revolving Note shall remain unpaid or the Bank shall have any Commitment hereunder,
the Borrower shall hold, as at the end of each fiscal quarter end, Liquidity of not less than $2,000,000.00.


 


(e)Year-to-Date
EBITDA. Section 5.10 of the Loan Agreement is amended and restated in its entirety to read as follows:


 


Section
5.10Minimum Fiscal Year-to-Date EBITDA. The Borrower will maintain its EBITDA during each fiscal year-to-date period
set forth below, at not less than the amount set forth opposite such period:


 


	Fiscal Year-to-Date Period Ending	 	 	Amount	 
	Last Sunday in November 2015	 	 	$	525,000	 
	Last Sunday in February 2016	 	 	$	1,250,000	 
	Last Sunday in May 2016	 	 	$	2,200,000	 



 


(f)Quarterly
Fixed Charge Coverage Ratio. Section 5.11 of the Loan Agreement is amended and restated in its entirety to read as
follows:


 


Section
5.11Quarterly Fixed Charge Coverage Ratio. So long as the Revolving Note shall remain unpaid or the Lender shall have
any Commitment hereunder, Borrower shall maintain a quarterly Fixed Charge Coverage Ratio, tested quarterly as of the end of each
fiscal quarter of Borrower (based upon a fiscal year end of the last Sunday in August, and fiscal quarter ends on the last Sunday
of each of November, February, May and August) for the most recently-ended four fiscal quarters of Borrower preceding each such
testing date, of not less than 1.20 to 1 as of the end of each such testing period, beginning on fiscal quarter ended on the last
Sunday of August in 2016, determined in accordance with generally recognized accounting principles consistently applied.


 




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The
term “Fixed Charge Coverage Ratio” means, as of any date, the ratio of (a) Borrower’s EBITDA, plus
non-cash stock option expenses, minus unfinanced capital expenditures, minus dividends, minus taxes paid
in cash; to (b) scheduled principal and interest payments due on all Debt of the Borrower; determined in each case, for such the
four fiscal quarter period ending on such date.


 


Section
3.Representations; No Default. The Borrower represents and warrants that: (a) the representations and warranties of
the Borrower contained in Article IV of the Loan Agreement are true and correct on and as of the date hereof, except to
the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and
correct as of such earlier date, (b) the Borrower has the power and legal right and authority to enter into this Amendment and
has duly authorized the execution and delivery of this Amendment and other agreements and documents executed and delivered by
the Borrower in connection herewith, (c) neither this Amendment nor the agreements contained herein contravene or constitute an
Event of Default under the Loan Agreement or the Revolving Note or a default under any other agreement, instrument or indenture
to which the Borrower is a party or a signatory, or any provision of the Borrower’s Articles of Incorporation or Bylaws
or, to the best of the Borrower’s knowledge, any other agreement or requirement of law, or result in the imposition of any
lien or other encumbrance on any of its property under any agreement binding on or applicable to the Borrower or any of its property
except, if any, in favor of the Bank, (d) no consent, approval or authorization of or registration or declaration with any party,
including but not limited to any governmental authority, is required in connection with the execution and delivery by the Borrower
of this Amendment or other agreements and documents executed and delivered by the Borrower in connection herewith or the performance
of obligations of the Borrower herein described, except for those which the Borrower has obtained or provided and as to which
the Borrower has delivered certified copies of documents evidencing each such action to the Bank, (e) no events have taken place
and no circumstances exist at the date hereof which would give the Borrower grounds to assert a defense, offset or counterclaim
to the obligations of the Borrower under the Loan Agreement, the Revolving Note or any of the other Loan Documents, (f) there
are no known claims, causes of action, suits, debts, liens, obligations, liabilities, demands, losses, costs and expenses (including
attorneys’ fees) of any kind, character or nature whatsoever, fixed or contingent, which the Borrower may have or claim
to have against the Bank, which might arise out of or be connected with any act of commission or omission of the Bank existing
or occurring on or prior to the date of this Amendment, including, without limitation, any claims, liabilities or obligations
arising with respect to the indebtedness evidenced by the Revolving Note, and (g) no Event of Default has occurred and is continuing
under the Loan Agreement or the Revolving Note.


 


Section
4.Affirmation, Further References. The Bank and the Borrower each acknowledge and affirm that the Loan Agreement, as
hereby amended, is hereby ratified and confirmed in all respects and all terms, conditions and provisions of the Loan Agreement
(except as amended by this Amendment) and of each of the other Loan Documents shall remain unmodified and in full force and effect.
All references in any document or instrument to the Loan Agreement is hereby amended and shall refer to the Loan Agreement, as
amended by this Amendment.


 




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Section
5.Severability. Whenever possible, each provision of this Amendment and any other statement, instrument or transaction
contemplated hereby or thereby or relating hereto or thereto shall be interpreted in such manner as to be effective, valid and
enforceable under the applicable law of any jurisdiction, but, if any provision of this Amendment or any other statement, instrument
or transaction contemplated hereby or thereby or relating hereto or thereto shall be held to be prohibited, invalid or unenforceable
under the applicable law, such provision shall be ineffective in such jurisdiction only to the extent of such prohibition, invalidity
or unenforceability, without invalidating or rendering unenforceable the remainder of such provision or the remaining provisions
of this Amendment or any other statement, instrument or transaction contemplated hereby or thereby or relating hereto or thereto
in such jurisdiction, or affecting the effectiveness, validity or enforceability of such provision in any other jurisdiction.


 


Section
6.Successors. This Amendment shall be binding upon the Borrower, the Bank and their respective successors and assigns,
and shall inure to the benefit of the Borrower, the Bank and to the respective successors and assigns of the Bank.


 


Section
7.Costs and Expenses. The Borrower agrees to reimburse the Bank, upon execution of this Amendment, for all reasonable
out-of-pocket expenses (including attorneys’ fees and legal expenses of counsel for the Bank) incurred in connection with
the Loan Agreement, including in connection with the negotiation, preparation and execution of this Amendment and all other documents
negotiated, prepared and executed in connection with this Amendment, and in enforcing the obligations of the Borrower under this
Amendment, and to pay and save the Bank harmless from all liability for, any stamp or other taxes which may be payable with respect
to the execution or delivery of this Amendment.


 


Section
8.Headings. The headings of various sections of this Amendment have been inserted for reference only and shall not
be deemed to be a part of this Amendment.


 


Section
9.Counterparts; Digital Copies. This Amendment may be executed in several counterparts as deemed necessary or convenient,
each of which, when so executed, shall be deemed an original, provided that all such counterparts shall be regarded as one and
the same document, and any party to this Amendment may execute any such agreement by executing a counterpart of such agreement.
A facsimile or digital copy (pdf) of this signed Amendment shall be deemed to be an original thereof.


 


Section
10.Release of Rights and Claims. Borrower, for itself and its successors and assigns, hereby releases, acquits, and
forever discharges Bank and its successors and assigns for any and all manner of actions, suits, claims, charges, judgments, levies
and executions occurring or arising from the transactions entered into with Bank prior to entering into this Amendment whether
known or unknown, liquidated or unliquidated, fixed or contingent, direct or indirect which Borrower may have against Bank.


 


Section
11.Governing Law. This Amendment shall be governed by the internal laws of the State of Minnesota, without giving effect
to conflict of law principles thereof.


 


Section
12.No Waiver.Nothing contained in this Amendment (or in any other agreement or understanding between the parties)
shall constitute a waiver of, or shall otherwise diminish or impair, the Bank’s rights or remedies under the Loan Agreement,
the Revolving Note or any of the other Loan Documents, or under applicable law.


 




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IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the day and year first above written. 


 


	BORROWER:	WSI
    INDUSTRIES, INC.,
	 	a
    Minnesota corporation


 


	 	By:	/s/
    Paul D. Sheely 
	 	 	Paul
    D. Sheely, Chief Financial Officer


 


	BANK:	BMO
    HARRIS BANK N.A.,
	 	a
    national banking association


 


	 	By:	/s/
    Kevin Rohrer
	 	 	Kevin
    Rohrer, Vice President


 








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